Publication: A Note on the Optimal Structure of Production
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1999
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Elsevier
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Abstract
We analyze the advantages of centralization and decentralization in industries in
which production takes place in several stages and the costs are privately observed
by the agents in charge of production. We demonstrate that "informational diseconomies"
arise when uncorrelated information is concentrated in the hands of a
single agent. These diseconomies arise when the stages of production are different
activities with different cost supports.
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Bibliographic citation
Journal of Economic Theory. 1999, vol. 89, nº 2, p. 234-246